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Mario Draghi is now one of Mark Carney's best friends. Carney expected the inflation rate to fluctuate slightly below the target level of 2% in the coming months. However, rapid economic growth can put more pressure on prices, hence, Sterling's appreciation can limit the burden on consumers. Investors welcomed fresh stimulus from the ECB, and the cable rocketed to 1.6845 level, hitting the upper boundary of the falling wedge pattern on the 4H chart. The pair, however, refused to move any higher and so far this week the pair has been hovering slightly below the 1.68-mark. Since the last week the pair has been trading in a narrow range between 1.6829 and 1.6784.
Dukascopy Community members are betting on a bearish scenario, as they expect the price to hit 1.6744 by this Friday. The level is 22 pips below the last week's average price. Moreover, 61% of respondents are bearish on the pair. Additionally, 60% of all opened positions are short, while pending orders in 100 pips range are distributed evenly.
ECB's stimulus is also beneficial for the U.S. Dollar, and according to Geula4x, "GBP/USD seems to be bearish on the daily chart. ECB's decision on negative deposit rate could continue to strengthen the US Dollar. Support lies at 1.6700 round number, which held price between May 28th and June 4th." In contrast, KingCobraz sees a bullish signal from technical indicators: "the daily trend continues with the cci pointing up and a Fibonacci retracement." Aggregate technical indicators are suggesting the short-term outlook is bearish, while in a longer term, the pair is still expected to appreciate. It seems that it will be extremely difficult to move above 1.68-mark without a strong catalyst, hence, this week's scenario is bearish. Thus, short traders should aim first 1.6784 and then head towards traders' target at 1.6744.
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